How Red Robin’s loyalty revamp helped drive same-store sales growth
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Dive Brief:
Red Robin grew its loyalty membership to 14.2 million guests at the end of the second quarter, with momentum expected to continue, CEO G.J. Hart said. In May, membership was nearing 14 million members.
The chain updated its Red Robin Royalty program in May, allowing guests to earn a point for every dollar spent. After reaching 100 points, guests receive a $10 reward for either dine-in or online orders, Hart said.
In addition to loyalty membership gains, the chain reported its highest guest satisfaction scores since 2016 during the second quarter, driven by several operational and menu improvements made in the past 20 months.
Dive Insight:
Without the loyalty change, Red Robin’s same-store sales would have decreased 0.8% during the second quarter, CFO Todd Wilson said. Red Robin’s redesigned loyalty program contributed 220 basis points to sames-store sales and comparable sales were up 1.4%.
Red Robin’s new rewards program is meant to allow guests to earn rewards faster than the previous iteration and “encourages more frequent visitation to capitalize on their earned rewards,” Hart said.
The program uses a 90-day redemption window as an incentive for repeat visits, he said, adding that guest response to the program during the first 10 weeks of the program “exceeded our expectations.”
New members also tend to visit more frequently. The average time to a second visit is now 39 days compared to 51 days, Hart said. About 130,000 new members signed up and completed a transaction in the last four weeks of Q2, up 240% year over year, Hart said.
The number of members transacting two times or more has increased by 12%, with members visiting two to five times per year seeing the highest increase. Loyalty guest checks are now around $4.40 higher than non-member checks, a significant increase, according to the company.
“We are pleased with the launch and initial traction of this new loyalty program and fully expect it to be a key driver of traffic for our future business,” Hart said.
The loyalty program also gives Red Robin a better way to communicate with members on a regular basis by sharing what’s going on at the restaurant, the latest limited-time offers and other elements, Hart said. The chain plans to take a more personalized and targeted approach with the loyalty program once it has a better idea of how guests dine and what their expectations are, he said.
The company also plans to add layers of gamification, elements of “surprise and delight,” and exclusive access to new menu items through the program, Hart said.
Other chains, including Domino’s and Wendy’s, are already reaping the benefits of revamped loyalty programs that are helping drive traffic and improving the guest experience. Domino’s, for example, reported an acceleration of membership, adding 2 million new members after its September 2023 overhaul.